money laundering in india - National Judicial Academy

MONEY LAUNDERING IN INDIA 1Paridhi Saxena, NLU, Raipur
The aim of this paper is to study and evaluate the concept of money laundering in India and
its law enforcement. Money laundering happens in almost every country in the world, and a
single scheme typically involves transferring money through several countries in order to
obscure its origins. The paper initially develops with the idea of money laundering along with
the process and techniques used in it. Then it goes on to discuss the impact it has on a
nation’s economy and otherwise. It then discusses the various initiatives taken to prevent
money laundering with special emphasis on the Indian initiatives particularly focussing on
the Prevention of Money Laundering Act, 2002. It discusses, with case references, the status
and efforts put in by the law enforcement agencies and where they lack. An attempt is made
to identify the problems or the loopholes in the law enforcement and thus suggestive
measures are given in order to improve them. In level II analysis, the number of cases filed in
the Supreme Court, High Courts and the Tribunals are depicted graphically with the help of
different charts also indicating the grounds for filing the same.
INTRODUCTION
Money laundering is a process where the proceeds of crime are transformed into apparently
legitimate money or other assets. It is the processing of criminal proceeds to disguise its
illegal origin. In simple words, it can be defined as the act of making money that comes from
one source to look like it comes from another source. INTERPOL's definition of money
laundering is: "any act or attempted act to conceal or disguise the identity of illegally
obtained proceeds so that they appear to have originated from legitimate sources".2 The act of
money laundering is done with the intention to conceal money or other assets from the State
so as to prevent its loss through taxation, judgement enforcement or blatant confiscation. The
criminals herein try to disguise the origin of money obtained through illegal activities to look
like it was obtained from legal sources because otherwise they will not be able to use it as it
would connect them to the criminal activity and the law enforcement officials would seize it. 3
Article 1 of EC Directive defines Money Laundering as “The conversion of property,
knowing that such property is derived from serious crime, for the purpose of concealing or
1
Paridhi Saxena, Student, 4th Year, BA.LLB. (H), Hidayatullah National Law University, Raipur.
Interpol General Secretariat Assembly in 1995 http://www.interpol.int/Crime-areas/Financial-crime/Moneylaundering
3
David A. Chaikin “Investigating Criminal & Corporate Money Trails”. in The Money Laundering and Cash
Transaction Reporting edited by Brent Fisse, David Fraser and Graeme Coss. North Ryde, NSW: Law Book Co.
Pp 257-293. (1992).
2
disguising the illicit origin of the property or of assisting any person who is involved in
committing such an offence(s) to evade the legal consequences of his action, and the
concealment or disguise of the true nature, source, location, disposition, movement, rights
with respect to, or ownership of property, knowing that such property is derived from serious
crime.”
The most common types of criminals who need to launder money are drug traffickers,
embezzlers, corrupt politicians and public officials, mobsters, terrorists and con artists. Drug
traffickers are in serious need of good laundering systems because they deal almost
exclusively in cash, which causes all sorts of logistics problems. Criminal activities such as
terrorism, illegal arms sales, financial crimes, smuggling, or illicit drug trafficking generate
huge sums of money and criminal organizations need to find a way to use these funds without
awakening suspicions about their illicit origin. 4
The purpose of these criminal organisations is to generate profits for the group or for one of
its individual members. When a criminal activity generates substantial profits, the individual
or group involved in such activities route the funds to safe heavens by disguising the sources,
changing the form or moving the funds to a place where they are less likely to attract
attention. The logic of controlling the drug money trial is that profit motivates drug sales, and
because most sales are in cash, the recipient of cash has to find some way of converting these
funds into utilizable financial resources that appear to have legitimate origins. 5
The objective of criminalising money laundering is to take profit out of the crime. The
rationale for the creation of the offence is that it is wrong for individuals and organisations to
assist criminals to benefit from the proceeds of their criminal activity or to facilitate the
commission of such crimes by providing financial services to them.6
4
FATF-GAFI, Financial Action Task Force on Money Laundering. “Basic Facts about Money Laundering”,
see <www.oecd.org/fatf>
5
Michael Levi, Money Laundering and Its Regulation, Annals of the American Academy of Political and Social
Science, Vol. 582, Cross-National Drug Policy (Jul., 2002), pp. 181-194.
6
http://www.int-comp.org/what-is-money-laundering
PROCESS OF MONEY LAUNDERING
Money laundering is a single process however, its cycle can be broken down into three
distinct stages namely, placement stage, layering stage and integration stage.7
Placement Stage: It is the stage at which criminally derived funds are introduced in the
financial system. At this stage, the launderer inserts the “dirty” money into a legitimate
financial institution often in the form of cash bank deposits. This is the riskiest stage of the
laundering process because large amounts of cash are pretty conspicuous, and banks are
required to report high-value transactions. To curb the risks, large amounts of cash is broken
up into less conspicuous smaller sums that are then deposited directly into a bank account, or
by purchasing a series of monetary instruments (cheques, money orders, etc.) that are then
collected and deposited into accounts at another location.
Layering Stage: It is the stage at which complex financial transactions are carried out in order
to camouflage the illegal source. At this stage, the launderer engages in a series of
conversions or movements of the money in order to distant them from their source. In other
words, the money is sent through various financial transactions so as to change its form and
make it difficult to follow. Layering may consist of several bank-to-bank transfers, wire
transfers between different accounts in different names in different countries, making
deposits and withdrawals to continually vary the amount of money in the accounts, changing
the money's currency, and purchasing high-value items such as houses, boats, diamonds and
cars to change the form of the money. This is the most complex step in any laundering
scheme, and it's all about making the origin of the money as hard to trace as possible. In some
instances, the launderer might disguise the transfers as payments for goods or services, thus
giving them a legitimate appearance.8
Integration stage: It is the final stage at which the ‘laundered’ property is re-introduced into
the legitimate economy. At this stage, the launderer might choose to invest the funds into real
estate, luxury assets, or business ventures. At this point, the launderer can use the money
without getting caught. It's very difficult to catch a launderer during the integration stage if
there is no documentation during the previous stages.
7
Syed Azhar Hussain Shah, Syed Akhter Hussain Shah and Sajawal Khan “Governance of Money Laundering:
An Application of the Principal-agent Model” The Pakistan Development Review, Vol. 45, No. 4, Papers and
Proceedings PARTS I and II Twenty-second Annual General Meeting and Conference of the Pakistan Society of
Development Economists Lahore, December 19-22, 2006 (Winter 2006), pp. 1117-1133 available at
<http://www.jstor.org/stable/41260672>
8
http://www.fatf-gafi.org/pages/faq/moneylaundering/
At each of the three stages of money laundering various techniques can be utilized. Following
are the various measures adopted all over the world for money laundering, even though it is
not exhaustive but it encompasses some of the most widely used methods:
1. Structuring Deposits: This is also known as smurfing9, this is a method of placement
whereby cash is broken into smaller deposits of money, used to defeat suspicion of
money laundering and avoid anti-money laundering reporting requirements.10
2. Shell companies: These are fake companies that exist for no other reason than to
launder money. They take in dirty money as "payment" for supposed goods or
services but actually provide no goods or services; they simply create the appearance
of legitimate transactions through fake invoices and balance sheets.11
3. Third-Party Cheques: Counter cheques or banker’s drafts drawn on different
institutions are utilized and cleared via various third-party accounts. Third party
cheques and traveller’s cheques are often purchased using proceeds of crime. Since
these are negotiable in many countries, the nexus with the source money is difficult to
establish.12
4. Bulk cash smuggling: This involves physically smuggling cash to another jurisdiction
and depositing it in a financial institution, such as an offshore bank, with greater bank
secrecy or less rigorous money laundering enforcement.13
9
Smurfs - A popular method used to launder cash in the placement stage. This technique involves the use of
many individuals (the "smurfs") who exchange illicit funds (in smaller, less conspicuous amounts) for highly
liquid items such as traveller cheques, bank drafts, or deposited directly into savings accounts. These
instruments are then given to the launderer who then begins the layering stage. For example, ten smurfs could
"place" $1 million into financial institutions using this technique in less than two weeks.
10
National Drug Intelligence Center (August 2011). "National Drug Threat Assessment" (PDF). p. 40.
11
Arvind Giriraj and Prashant Kumar Mishra, Money Laundering: An Insight Into The Modus Operandi With
Case
Studies
http://www.skoch.in/images/stories/security_paper_knowledge/Arvind%20Giriraj%20and%20Prashant%20Ku
mar%20Mishra%20-%20Money%20Laundering.pdf (accessed on 14 May 2015).
12
Kumar S. Vijay. (2009) “Controlling Money Laundering in India –Problems and Perspectives” Mumbai,
INDIA pg. 11.
13
"National Money Laundering Threat Assessment" (PDF). December 2005. p. 33
http://www.dea.gov/pubs/pressrel/011106.pdf (accessed on 14 May 2015).
IMPACT OF MONEY LAUNDERING
Launderers are continuously looking for new routes for laundering their funds. Economies
with growing or developing financial centres, but inadequate controls are particularly
vulnerable as established financial centre countries implement comprehensive anti-money
laundering regimes. Differences between national anti-money laundering systems will be
exploited by launderers, who tend to move their networks to countries and financial systems
with weak or ineffective countermeasures.14
The possible social and political costs of money laundering, if left unchecked or dealt with
ineffectively, are serious. Organised crime can infiltrate financial institutions, acquire control
of large sectors of the economy through investment, or offer bribes to public officials and
indeed governments. The economic and political influence of criminal organisations can
weaken the social fabric, collective ethical standards, and ultimately the democratic
institutions of the society. In countries transitioning to democratic systems, this criminal
influence can undermine the transition.
If left unchecked, money laundering can erode a nation’s economy by changing the demand
for cash, making interest and exchange rates more volatile, and by causing high inflation in
countries where criminal elements are doing business. The draining of huge amounts of
money a year from normal economic growth poses a real danger for the financial health of
every country which in turn adversely affects the global market.15 Most fundamentally,
money laundering is inextricably linked to the underlying criminal activity that generated it.
Laundering enables criminal activity to continue.
Thus, the impact of money laundering can be summed up into the following points:
 Potential damage to reputation of financial institutions and market
 Weakens the “democratic institutions” of the society
 Destabilises economy of the country causing financial crisis
 Give impetus to criminal activities
 Policy distortion occurs because of measurement error and misallocation of resources
 Discourages foreign investors
14
“What influence does money laundering have on economic development?” available at http://www.fatfgafi.org/pages/faq/moneylaundering/ (accessed on 16th May 2015).
15
Chapter-IV Money Laundering in India: An Offshoot of Drug Trafficking available at
http://shodhganga.inflibnet.ac.in:8080/jspui/bitstream/10603/18155/10/10_chapter4.pdf (accessed on 14th May
2015) Pg. 12-13.
 Causes financial crisis
 Encourages tax evasion culture
 Results in exchange and interest rates volatility
 Provides opportunity to criminals to hijack the process of privatisation Contaminates
legal transaction.16
16
Syed Azhar Hussain Shah, Syed Akhter Hussain Shah and Sajawal Khan “Governance of Money Laundering:
An Application of the Principal-agent Model” The Pakistan Development Review, Vol. 45, No. 4, 22nd Annual
General Meeting and Conference of the Pakistan Society of Development Economists Lahore, December 19-22,
2006, pp. 1117-1133 available at <http://www.jstor.org/stable/41260672>
PREVENTION OF MONEY LAUNDERING – GLOBAL INITIATIVES
Since money laundering is an international phenomenon, transnational co-operation is of
critical importance in the fight against this menace. A number of initiatives have been taken
to deal with the problem at the international level. The major international agreements
addressing money laundering include the United Nations Convention against Illicit
Trafficking in Drugs and Psychotropic Substances, popularly known as the Vienna
Convention17 and the Council of Europe Convention on Laundering, Search, Seizure and
Confiscation of the Proceeds of Crime. The role of financial institutions in preventing and
detecting money laundering has also been the subject of pronouncements by the Basle
Committee on Banking Regulation Supervisory Practices, the European Union and the
International Organization of Securities Commissions.
 THE VIENNA CONVENTION
It was the first major initiative in the prevention of money laundering held in December 1988.
This convention laid down the groundwork for efforts to combat money laundering by
obliging the member states to criminalize the laundering of money from drug trafficking. It
promotes international cooperation in investigations and makes extradition between member
states applicable to money laundering. The convention also establishes the principle that
domestic bank secrecy provisions should not interfere with international criminal
investigations.18
 THE COUNCIL OF EUROPE CONVENTION
This convention in 1990 establishes a common policy on money laundering. It sets out a
common definition of money laundering and common measures for dealing with it. The
Convention lays down the principles for international cooperation among the member states,
which may also include states outside the Council of Europe. One of the purpose of this
convention is to facilitate international cooperation as regards investigative assistance, search,
seizure and confiscation of the proceeds of all types of criminality, particularly serious crimes
such as drug offences, arms dealing, terrorist offences etc. and other offences which generate
large profits.
17
The Vienna Convention – 19th December 1988. A delegation of 106 States participated in the Convention.
Mr. Guillermo Bedregal Gutiérrez (Bolivia) was elected President of the Convention. As of 24 March 2003,
there
were
167
parties
and
87
signatories
to
this
convention.
(http://untreaty.un.org/english/treatyevent2003/Treaty_7.htm)
18
United Nations Convention Against Illicit Traffic In Narcotic Drugs And Psychotropic Substances, 1988
available at http://www.unodc.org/pdf/convention_1988_en.pdf (last accessed on May 24, 2015)
 BASLE COMMITTEE’S STATEMENT OF PRINCIPLES
In December 1988, the Basle Committee on Banking Regulations and Supervisory Practices
issued a statement of principles which aims at encouraging the banking sector to adopt
common position in order to ensure that banks are not used to hide or launder funds acquired
through criminal activities. The Statement of Principles does not restrict itself to drug-related
money laundering but extends to all aspects of laundering through the banking system, i.e.
the deposit, transfer and/or concealment of money derived from illicit activities whether
robbery, terrorism, fraud or drugs. It seeks to deny the banking system to those involved in
money laundering by the application of the four basic principles namely, identifying the
customer, compliance with the laws, cooperation with Law Enforcement Agencies and
adherence to the Statement.
 THE FINANCIAL ACTION TASK FORCE (FATF)
The FATF is an inter-governmental body established at the G7 summit at Paris in 1989 with
the objective to set standards and promote effective implementation of legal, regulatory and
operational measures to combat money laundering and terrorist financing and other related
threats to the integrity of the international financial system. 19
The FATF has developed a series of Recommendations that are recognised as the
international standards for combating money laundering and the financing of terrorism. They
form a basis for a co-ordinated response to these threats to the integrity of the financial
system and help ensure a level playing field. In April 1990, it issued a report containing a set
of Forty Recommendations, which were intended to comprehensive plan of action needed to
fight against money laundering. In October 2001, it issued the Eight Special
Recommendations to deal with the issue of terrorist financing. In October 2004, it published a
Ninth Special Recommendation, further strengthening the agreed international standards for
combating money laundering and terrorist financing.20
19
Kathryn L. Gardner, Fighting Terrorism the FATF Way, Lynne Rienner Publishers, Vol. 13, No. 3 (July–
Sept. 2007), pp. 325-345.
20
Ibid.
 UNITED
NATIONS
GLOBAL
PROGRAMME
AGAINST
MONEY
LAUNDERING
GPML was established in 1997 with a view to increase effectiveness of international action
again money laundering through comprehensive technical cooperation services offered to
Governments. The programme encompasses following 3 areas of activities, providing various
means to states and institutions in their efforts to effectively combat money laundering:
1. Technical cooperation is the main task of the Programme. It encompasses activities of
creating awareness, institution building and training.
2. The research and analysis aims at offering States Key Information to better
understand the phenomenon of money laundering and to enable the international
community to devise more efficient and effective countermeasure strategies.
3. The commitment to support the establishment of financial investigation services for
raising the overall effectiveness of law enforcement measures.
PREVENTION OF MONEY LAUNDERING – INDIAN INITIATIVES
In India, before the enactment of Prevention of Money Laundering Act, 2002 (PMLA) the
major statutes that incorporated measures to address the problem of money laundering were:
 The Income Tax Act, 1961
 The Conservation of Foreign Exchange and Prevention of Smuggling
Activities Act, 1974 (COFEPOSA)
 The Smugglers and Foreign Exchange Manipulators Act, 1976 (SAFEMA)
 The Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPSA)
 The Benami Transactions (Prohibition) Act, 1988
 The Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic
Substances Act, 1988
 The Foreign Exchange Management Act, 2000, (FEMA)
During the second half of the 20th century, with the increasing threat of modern and
sophisticated forms of transnational criminal activity, concern has arisen over the lack of
effective national laws to combat organized crime and the laundering of its proceeds. India
has had separate laws to deal with smuggling, narcotics, foreign trade violations, foreign
exchange manipulations etc, and also special legal provisions for preventive detention and
forfeiture of property etc, which were enacted over a period of time to deal with such serious
crimes. However, the provisions under one of the Indian laws, namely, the Foreign Exchange
Regulation Act, 1973 (FERA) were considered to be 'draconian’ and it was repealed making
foreign exchange violations civil offences under a new law called the Foreign Exchange
Management Act (FEMA).21
PREVENTION OF MONEY LAUNDERING ACT, 2002
In view of an urgent need for the enactment of a comprehensive legislation for preventing
money laundering and connected activities, confiscation of proceeds of crime, setting up of
agencies and mechanisms for coordinating measures for combating money laundering etc.,
the Prevention of Money Laundering Bill 1998 was introduced in Parliament on 4th August,
1998. The Bill received the assent of the President and became Prevention of Money
Laundering Act, 2002 on 17th January 2003. The Act has come into force with effect from 1 st
July 2005. It has been amended in 2005, 2009 and recently in 2012. The objective of the Act
21
C. Satapathy, Money Laundering: New Moves to Combat Terrorism, Economic and Political Weekly, Vol.
38, No. 7 (Feb. 15-21, 2003), pp. 599-602.
is to prevent money-laundering and to provide for confiscation of property derived from, or
involved in, money-laundering and for matters connected therewith or incidental thereto.
SCHEME OF THE ACT
The Act consists of 10 chapters containing 75 sections and 1 schedule divided in 5 parts.
Chapter I contain section 1 and 2 which deals with short title, extent and commencement and
definitions. Chapter II contain section 3 and 4 which provide for offences and punishment for
money laundering. Chapter III has sections 5-11 which provide for attachment of property,
adjudication and confiscation. Chapter IV has sections 12-15 which deals with obligations of
banking companies, financial institutions and intermediaries. Chapter V has sections 16-24
which relates to summons, searches, seizures, retention, presumptions etc. Chapter VI has
sections 25-42 which deals with the establishment, composition, qualifications, powers and
procedures etc of the Appellate Tribunal. Chapter VII has sections 43-47 which deal with
Special Courts and Chapter VIII has sections 48-54 which provide for various authorities
under the Act their appointment, powers, jurisdiction etc. Chapter IX has sections 55-61
which deals with reciprocal arrangement for assistance in certain matters and procedure for
attachment and confiscation of property. Chapter X has sections 62-75 which deals
miscellaneous provisions including punishments, cognizance of offences, offences by
companies etc.
SALIENT FEATURES OF THE ACT
I. Offence of Money Laundering and its punishment
An offence of money laundering is said to be committed when a person in any way deals with
the proceeds of crime22. The proceeds of the crime referred above include the normal
crimes23 and the scheduled crimes24.25 The prescribed punishment is 3-7 years rigorous
imprisonment for an offence of money laundering with fine.26 In case of an offence
mentioned under Part A27, imprisonment would extend up to 10 years.28
22
Section 2(u) of the Act: any property derived or obtained, directly or indirectly, by any person as a result of
criminal activity relating to a scheduled offence or the value of any such property or where such property is
taken or held outside the country, then the property equivalent in value held within the country.
23
Crimes which are not mentioned specifically in the schedule of the Act.
24
The crimes which are mentioned in the Part A and Part B and now Part C (added in PML Bill -08) of the
Schedule attached to the Act, if the total value involved in such offences is thirty lakh rupees or more (this limit
has also been removed under PML Bill 08)
25
Section 3 of the PMLA.
26
Section 4 of the PMLA.
27
These deal with the offences under the Narcotic Drugs and Psychotropic Substances Act, 1985, Sections 15,
16, 17,18, 19, 20, 21, 22, 23, 24, 25A, 27A, 29.
II. Attachment, Adjudication and Confiscation
The confiscation of the property under the Act is dealt with in accordance with the chapter III
of the said Act. An official not below the rank of Deputy Director can order attachment of
proceeds of crime for a period of 180 days, after informing the Magistrate. Thereafter he will
send a report containing material information relating to such attachment to the Adjudicating
Authority. 29 Section 8 details the procedure of adjudication. After the official forwards the
report to the Adjudication Authority, this Authority should send a show cause notice to
concerned person(s) within 30 days. After considering the response and all related
information, the Authority can give finality to the order of attachment and make a
confiscation order, which will thereafter be confirmed or rejected by the Special Court.
III. Obligations of Banking Companies, Financial Institutions and Intermediaries
The reporting entity is required to keep a record of all material information relating to money
laundering and forward the same to the Director. Such information should be preserved for 5
years.30 The functioning of the reporting entity will be supervised by the Director who can
impose any monetary penalty or issue warning or order audit of accounts, if the entity
violates its obligations.31 The Central Government, after consulting the Reserve Bank of India
is authorised to specify rules relating to managing information by the reporting entity. 32
IV. Enforcement Paraphernalia
 Adjudicating Authority - The Act empowers the Central Government to constitute an
Adjudicating Authority having a Chairman and 2 members and define their scope of
functioning and other terms of service. The Adjudicating Authority will operate
through a Single or Division bench. The Authority has been given autonomous
powers to regulate its adjudicating procedure.33
 Administrator - The property laundered will be taken care of i.e. managed after
confiscation by an Administrator who will act in accordance with the instructions of
the Central Government.34
 Appellate Tribunal - All appeals from an order made by the Adjudicating Authority
will lie to an Appellate Tribunal constituted by the Central Government.35 It will
28
Proviso to Section 4 of the PMLA.
Section 5 of the PMLA.
30
Section 12 of PMLA.
31
Section 13 of PMLA.
32
Section 15 of PMLA
33
Section 6 of PMLA.
34
Section 10 of PMLA.
29
consist of 2 members headed by a Chairman. 36 An official can resign by sending his
resignation to the Central Government thereby giving a 3 months’ notice. He can also
be removed by an order made by the Central Government on the grounds of
misbehaviour or incapacity. 37
 Special Courts - the Central Government, after consulting the High Court is
empowered to designate Court of Sessions as Special Courts.38 The Special courts can
try all scheduled offences and that under section 4 and also offence under section 3,
but after the authority requests in this behalf. 39
 Authorities under the Act - There shall be the following classes of authorities for the
purposes of this Act, namely:
(a) Director or Additional Director or Joint Director,
(b) Deputy Director,
(c) Assistant Director, and
(d) such other class of officers as may be appointed for the purposes of this Act.40
V. Summons, Searches and Seizures etc.
The power of surveying and scrutinizing records kept at any place is conferred on the
Adjudicating Authority. The Authority may ask any of its officials to carry on the search,
collect all relevant information, place identification marks and thereafter send a report to it.41
The search of a person to be conducted is allowed if it is ordered by the Central Government.
The authority authorized in this behalf cannot detain a person beyond 24 hours, must ensure
the presence of 2 witnesses, prepare a list of things seized signed by the witnesses and
forward the same to the Adjudicating Authority. 42
A property confiscated or frozen under this Act can be retained for 180 days. This period can
be extended by the Adjudicating Authority after being satisfied of the merits of the case. The
Court or the Adjudicating Authority can subsequently also order the release of such
property.43 There shall be a presumption of the ownership of property and records recovered
35
Section 25 of PMLA.
Section 27 of PMLA.
37
Section 32 of PMLA.
38
Section 43 of PMLA.
39
Section 44 of PMLA.
40
Section 48 of PMLA.
41
Section 16 of PMLA.
42
Section 18 of PMLA.
43
Retention of Property u/s 20 of PMLA.
36
from a person's possession.44 The burden of proof will be on the accused to prove that he is
not guilty of an offence under this Act.45
The offences under the Act are to be cognizable and non-bailable.46
ANTI MONEY LAUNDERING STANDARDS
RBI issued Master Circular on Know Your Customer (KYC) norms/ Anti-Money Laundering
(AML) standards/ Combating of Financing of Terrorism (CFT)/ Obligation of banks under
Prevention of Money Laundering Act, 2002 and Banks were advised to follow certain
customer identification procedure for opening of accounts and monitoring transactions of a
suspicious nature for the purpose of reporting it to appropriate authority. These KYC
guidelines have been revisited in the context of the Recommendations made by the Financial
Action Task Force (FATF) on Anti-Money Laundering (AML) standards and on Combating
Financing of Terrorism (CFT). Banks have been advised to ensure that a proper policy
framework on KYC and AML measures with the approval of the Board is formulated and put
it place.
The Objective of KYC Norms/ AML Measures/ CFT Guidelines is to prevent banks from
being used, intentionally or unintentionally, by criminal elements for money laundering or
terrorist financing activities. KYC procedures also enable banks to know/ understand their
customers and their financial dealings better which in turn help them manage their risks
prudently.
OBLIGATION OF BANKS
Banks should keep in mind that the information collected from the customer for the purpose
of opening of account is to be treated as confidential and details thereof are not to be divulged
for cross selling or any other like purposes. Banks should, therefore, ensure that information
sought from the customer is relevant to the perceived risk, is not intrusive, and is in
conformity with the guidelines issued in this regard. Any other information from the
customer should be sought separately with his/her consent and after opening the account.
Banks should ensure that any remittance of funds by way of demand draft, mail/ telegraphic
transfer or any other mode and issue of traveller’s cheques for value of Rupees fifty thousand
44
Presumption as to records or property in certain cases u/s 22 PMLA.
Section 24 of PMLA.
46
Section 45 of PMLA.
45
and above is effected by debit to the customer’s account or against cheques and not against
cash payment.
Banks should ensure that provisions of Foreign Contribution (Regulation) Act, 1976 as
amended from time to time, wherever applicable are strictly adhered to.
KYC Policy
Banks should frame their KYC policiese incorporating the following four key elements:
 Customer Acceptance Policy;
 Customer Identification Procedures;
 Monitoring of Transactions; and
 Risk Management.
For the purpose of KYC policy, a ‘Customer’ is defined as:
 A person or entity that maintains an account and/or has a business relationship with
the bank;
 One on whose behalf the account is maintained (i.e. the beneficial owner);
 Beneficiaries of transactions conducted by professional intermediaries, such as Stock
Brokers, Chartered Accountants, Solicitors etc. as permitted under the law; and
 Any person or entity connected with a financial transaction which can pose significant
reputational or other risk to the bank, say, a wire transfer or issue of a high value
demand draft as a single transaction.
THE FINANCIAL INTELLIGENCE UNIT - INDIA (FIU-IND)
While the Prevention of Money Laundering Act (PMLA) 2002, forms the core framework for
combating money laundering in the country, The Financial Intelligence Unit - India (FIUIND) is the nodal agency in India for managing the AML ecosystem and has significantly
helped in coordinating and strengthening efforts of national and international intelligence,
investigation and enforcement agencies in pursuing the global efforts against money
laundering and related crimes. These are specialized government agencies created to act as an
interface between financial sector and law enforcement agencies for collecting, analysing and
disseminating information, particularly about suspicious financial transactions.
In terms of the PMLA Rules, banks are required to report information relating to cash and
suspicious transactions and all transactions involving receipts by non-profit organizations of
value more than rupees ten lakh or its equivalent in foreign currency to the Director, FIUIND in respect of transactions.
It receives prescribed information from various entities in financial sector under the
Prevention of Money Laundering Act 2002 (PMLA) and in appropriate cases disseminates
information to relevant intelligence/ law enforcement agencies which include Central Board
of Direct Taxes, Central Board of Excise & Customs Enforcement Directorate, Narcotics
Control Bureau, Central Bureau of Investigation, Intelligence agencies and regulators of
financial sector. FIU-IND does not investigate cases.47
47
The Prevention of Money Laundering (Amendment) Bill, 2011, Standing Committee On Finance (2011-2012)
(56th Report) Ministry of Finance (Department of Revenue) pg. 18.
JUDICIAL PRONOUNCEMENTS
 THE FAKE STAMP PAPER OR TELGI SCAM48
The syndicate led by Abdul Karim Telgi used the chemically washed stamps and thus reintroduced the used stamp papers back into the system simply by washing them in the
chemicals so as to remove the original contents. This was made possible because of the
loophole in the system where there was no branding of new stamps and the used stamp papers
were not cancelled. Also, the receipt used by Central Stamp Office does not have any security
features so his allowed the accused to replicate them and show them as a genuine copy in
order to convince the customers. Additionally, he cultured officials at the Security Press in
Nashik, where stamp papers were printed. With their participation he used government
machinery to print stamp paper and eventually bought some of the machinery and started
counterfeiting on his own.
The trial court held that evidences show that Abdul Karim Telgi hired an office at City
Centre, Indore and he also took apartment on rent and was carrying on business of sale of
fake Government revenue papers causing loss to the Government and corresponding gain to
himself. The Court thus, found the accused guilty of the offences and sentenced him to
various terms of imprisonment.
The accused filed an appeal to the High Court against the order of the Trail Court. While
dismissing the appeal the Court held that considering the making out of a consummate crime
and resultant loss caused to the public revenue by sale of fake, counterfeit stamp papers,
adhesive stamps, non-judicial stamp papers, Appellant has caused substantial loss to the
Government and corresponding gain to himself by his 'white collar' crime. It was an
economic crime which has cascading effect. This is one of those exceptional cases where the
law should come down with heavy hands to deal such kind of persons who are a menace to
the Society.
Observation: The Court does not blindly follows the provisions of the Act but look into the
depth of the activities of the accused, the loss and damages caused to the Government and the
public; and gives punishment which is proportional to the criminal act.
48
Abdul Karim Telgi and Sohail Khan vs. Union of India, through CBI, 2014(2)JLJ136
 PAREENA SWARUP vs. UNION OF INDIA,49
In this case, the Supreme Court has determined the constitutionality of the Adjudicating
Authorities and the Appellate Tribunal under the PMLA, 2002. A Public Interest Litigation
was filed under Article 32 of the Constitution seeking to declare various sections of the Act
such as Section 6 which deals with adjudicating authorities, composition, powers etc., Section
25 which deals with the establishment of Appellate Tribunal, Section 27 which deals with
composition etc. of the Appellate Tribunal, Section 28 which deals with qualifications for
appointment of Chairperson and Members of the Appellate Tribunal, Section 32 which deals
with resignation and removal, Section 40 which deals with members etc. as ultra vires of
Articles 14, 19(1)(g), 21, 50, 323B of the Constitution of India. It was also pleaded that these
provisions are in breach of scheme of the Constitutional provisions and power of judiciary.
The Court said that it is necessary to draw a line which the executive may not cross in their
misguided desire to take over bit by bit and judicial functions and powers of the State
exercised by the duly constituted Courts. While creating new avenue of judicial forums, it is
the duty of the Government to see that they are not in breach of basic constitutional scheme
of separation of powers and independence of the judicial function. The Court agreed that the
provisions of Prevention of the Money Laundering Act are so provided that there may not be
independent judiciary to decide the cases under the Act but the Members and the Chairperson
to be selected by the Selection Committee headed by Revenue Secretary. Thus, the Court
found merit in the arguments of the Petitioner and ordered to implement amended rules in the
Act which can be seen by way of amendment of 2008 in the Act.50
Observation: The Court maintained the basic structure of the Constitution which includes
separation of powers and independence of judiciary and did not allow the Executive to act
beyond their powers curbing the judicial powers.
49
50
(2008) 14 SCC 107.
Ibid.
 UNION OF INDIA vs. HASSAN ALI KHAN & ANR. 51
The allegation against the accused is that they have committed an offence punishable under
Section 4 of the Prevention of Money Laundering Act, 2002. The said case has been
registered on the basis of a complaint filed by the Deputy Director, Directorate of
Enforcement on the basis of the Report based on certain information and documents received
from the Income Tax Department.
An investigation was also conducted under the Foreign Exchange Management Act, 1999,
(‘FEMA’). Show-cause notices were issued to the accused for alleged violation of Sections
3A and 4 of FEMA for dealing in and acquiring and holding foreign exchange to the extent of
Rs.36,000 crores approximately in Indian currency, in his account with the Union Bank of
Switzerland. Inquiries also revealed that Shri Hassan Ali Khan had obtained at least three
Passports in his name by submitting false documents, making false statements and by
suppressing the fact that he already had a Passport.
Based on the aforesaid material, the Directorate of Enforcement arrested the accused and
produced him before the Special Judge, PMLA and was remanded in custody which was
rejected and the accused was released on bail. The Union of India thereupon filed Special
Leave Petition and upon observing that the material made available on record prima facie
discloses the commission of an offence by the accused punishable under the provisions of the
PMLA, the Supreme Court disposed of the appeal as well as the Special Leave Petition and
set aside the order of the Special Judge, PMLA and directed that the accused be taken into
custody. Thereafter, the accused was remanded into custody from time to time.
Observation: The offence of money laundering is an offence of a grave nature. A person
indulged in it cannot escape from the hands of the law. If such an offence is committed, strict
actions will be taken.
51
[2011] 11 SCR 778.
 ANOSH EKKA vs. CENTRAL BUREAU OF INVESTIGATION
In this case, after the accused became M.L.A. and then the Minister, he acquired enormous
moveable and immovable assets in his own name and in the name of his family members
within a short period of three years. By his influence he got the works allotted in the name of
his fictitious construction Company. Apart from that he also indulged in Money Laundering.
Absolutely evasive replies were given by him and his wife about the assets. The CBI is
collecting materials from different parts of the country and from outside the country also.
Bail of the accused was earlier rejected twice upto the Supreme Court. However, liberty was
given to renew the prayer if there is inordinate delay in completing the investigation. But
from the records, it appeared that the accused himself was responsible for delaying the
investigation/the trial on one pretext or the other. The supposed ground of sickness was taken
on number of dates to avoid appearance in court and for remaining in hospitals for long
periods. Prima facie, the accused, who claimed to be a public representative, was involved in
looting and laundering enormous public money. He has not only tampered with the evidences
but has been also abusing the process of law and is making contempt of the justice delivery
system.
Observation: The accused cannot take advantage of the wrong done by him.
 HARI NARAYAN RAI vs. THE UNION OF INDIA
The offence committed is punishable under Section 3 and 4 of the Prevention of Money
laundering Act, 2002. The High Court held that it was clear that the offence under the said
Act would continue till the accused continues to hold proceeds of crime and got himself
involved in the process and activity connected with the proceeds of crime projecting the same
as untainted property and in the present case, the accused had been attempting to convert and
project the proceeds of crime in the aforesaid manner. Further, sufficient material had been
collected during investigation to prove the guilt of petitioner. Section 45 of the Act provides
that bail was to be granted by the Appellate Court only on the satisfaction that there were
reasonable grounds for believing that the Petitioner was not guilty of such offence and that he
was not likely to commit any offence while on bail. But since the allegations against the
petitioner were very serious and sufficient material had come up against him, his prayer for
bail was rejected.
Observation: Though Section 45 of PMLA gives a provision to grant bail if the Court is
satisfied that the accused is not likely to commit any act in furtherance of the offence, but it
can be rejected looking into the seriousness of the offence and the material collected against
the offender during investigation.
 ARUN KUMAR MISHRA vs. DIRECTORATE OF ENFORCEMENT52
The CBI received information that five employees of Punjab National Bank and other
persons had during the period from November, 2005 to December 2006 entered into a
criminal conspiracy and made false entries in the accounts of PNB allowing deposits and
withdrawal from five fictitious accounts maintained in the name of non- existent persons. By
doing so, said persons misappropriated the funds of PNB and also caused a pecuniary gain to
themselves or any other persons and correspondingly pecuniary loss to the PNB.
The commission of the alleged offences was during the period from November, 2005 to
December, 2006. Section 3 of the PMLA specifically mandates that the act of money
laundering should be intentional; therefore, it has to be traced to the point of time when the
actual transaction took place. The offence punishable under Section 120B IPC and Section 13
of the PC Act were inserted in the schedule of PMLA w.e.f. 01.06.2009 i.e. after the period in
which the alleged offences have been committed. It is settled principle of law that the
provisions of law cannot be retrospectively applied, as Article 20(1) of the Constitution bars
the ex-post facto penal laws and no person can be prosecuted for an alleged offence which
occurred earlier, by applying the provisions of law which have come into force after the
alleged offence.
Thus, the court disposed off the case stating that if the offence of money laundering is
established against the petitioner in this case, then the Enforcement Directorate shall be at
liberty to initiate fresh proceedings against the petitioner in accordance with law, thereafter.
Observation: If an offence is committed under any Act and needs an action, the accused
shall, in no case, be held liable under the Act by a retrospective effect as it will be violative of
fundamental rights enshrined in part III of the Constitution of India. Fresh proceedings may
be initiated.
52
In the High Court of Delhi (2015)
 SHIV KANT TRIPATHI vs. STATE OF U.P.53
Brief facts of the case are: The petitioner lodged an F.I.R. alleging commission of certain
scheduled offences, certain offences under the Prevention of Corruption Act, 1988 as well as
commission of offences under Sections 3 and 4 of the Money-Laundering Act. The substance
of the allegations in the FIR is that Amar Singh while holding the office of the Chairman of
the Uttar Pradesh Development Council, misused his official position and awarded various
Government contracts worth thousands of crores to companies owned and controlled by him
and he also received kickbacks in the form of commission. It was also alleged that he
indulged in Money-Laundering business by creating a web of shell companies. Thus, he was
in possession of wealth disproportionate to his known sources of income and misused his
position by indulging in Money-Laundering business by conspiring with other Directors,
officials and statutory authorities. So far as the offences under the Money-Laundering Act are
concerned the Enforcement Directorate had completed the investigation but on the basis of
materials made available during investigation, the Directorate did not find anything against
Amar Singh to submit a charge-sheet and therefore, the investigation has been closed but no
report has been submitted in any Court.
The Court held that the Enforcement Directorate is duty bound to submit final report or
charge-sheet, as the case may be, before the Court which is designated as Special Court by
the Central Government in consultation with the Chief Justice of the High Court under
Section 43 of the Money-Laundering Act. In the present case, admittedly after completing
investigation the Enforcement Directorate has not filed the final report on the ground that
there is no provision for submission of the final report under the Money-Laundering Act.
Since the term 'investigation' shall also include submission of final report as defined in the
Code, it was directed by the Court that if the process is issued by the Magistrate or upon a
further investigation a charge-sheet is submitted in respect of any scheduled offence, the
Enforcement Directorate will submit the Final Form before the designated Court so that the
designated Court shall be in a position to examine the efforts made by way of investigation,
the evidence collected during the investigation and find out as to whether the final report was
justified or not.
53
2013 (6) ADJ 672.
Observation: The judgement in this case gives us an example that the Court keep a strict
check and control over the actions of the Authorities under the PMLA and direct them to do
the acts which they are duty bound to do.
 B. RAMA RAJU, s/o B. RAMALINGA RAJU vs. UNION OF INDIA54
In this case, a writ petition was filed challenging certain provisions of the Prevention of
Money Laundering Act, 2002 including its amendments.
The provision of attachment and confiscation under Section 2(1) of the PMLA 2002 was
challenged. The issue was whether property owned by or in possession of person, other than
person charged of having committed a scheduled offence is liable to attachment and
confiscation proceedings and if so whether Section 2(1)(u) was invalid. It was held that
object of Act is to prevent money laundering and connected activities and confiscation of
"proceeds of crime" and preventing legitimizing of money earned through illegal and
criminal activities by investments in moveable and immovable properties often involving
layering of money generated through illegal activities. Therefore, the Act defines expression
"proceeds of crime" expansively to sub-serve broad objectives of Act. Thus property owned
or in possession of a person, other than a person charged of having committed scheduled
offence was equally liable to attachment and confiscation proceedings under Chapter III.
Retrospective operation of section 5 of PMLA 2002 was also challenged. The issue was
whether provisions of second proviso of Section 5 were applicable to property acquired prior
to enforcement of this provision and if so, whether provision is invalid for retrospective
penalization. It was held that huge quanta of illegally acquired wealth corrodes vitals of rule
of law; fragile patina of integrity of some of our public officials and State actors; and
consequently threatens sovereignty and integrity of Nation. Parliament has authority to
legislate and provide for forfeiture of proceeds of crime which is a produce of specified
criminality acquired prior to enactment of Act as well. It has also authority to recognise
degrees of harm such conduct has on fabric of society and to determine appropriate remedy.
Thus provisions of second proviso to Section 5 were applicable to property acquired even
prior to coming into force of this provision and even so were not invalid for retrospective
penalization. 55
54
55
[2011] 108 SCL 491 (AP); Centre for Public Interest Litigation vs. The Union of India, (2011) 1 SCC 560
Ibid.
Procedure to acquisition u/s 8 of PMLA 2002 was also challenged. The issue was whether
provisions of Section 8 were invalid for procedural vagueness and for exclusion of mens rea
of criminality in acquisition of such property and for enjoining deprivation of possession of
immovable property even before conclusion of guilt/conviction in prosecution for an offence
of money laundering? It was held that considering object and scheme of Act, provisions of
Section 8 could not be held invalid for vagueness; incoherence as to onus and standard of
proof; ambiguity as regards criteria for determination of nexus between property targeted for
attachment/confirmation and offence of money-laundering; or for exclusion of mens rea/
knowledge of criminality in acquisition of such property. Section 8(4) which enjoined
deprivation of possession of immovable property pursuant to order confirming provisional
attachment and before conviction of accused for offence of money-laundering, was valid.
Presumption in respect of inter-connected transactions u/s 23 of PMLA 2002 was also
challenged. The issue was whether presumption enjoined by Section 23 was unreasonably
restrictive, excessively disproportionate? It was held that Section 23 enjoins a rule of
evidence and rebuttable presumption considered essential and integral to effectuation of
purposes of Act in legislative wisdom. Thus, validity of provision was upheld.
Shifting of burden of proof under Sections 3 and 24 of PMLA 2002 was also challenged. The
issue was whether shifting/imposition of the burden of proof, by Section 24 is arbitrary and
invalid and was applicable only to trial of offence under Section 3? It was held that where
property is in ownership, control or possession of person not accused of having committed an
offence under Section 3 and where such property is part of inter-connected transactions
involved in money laundering, then and in such event presumption enjoined in Section 23
comes into operation and not inherence of burden of proof under Section 24 of Act. Therefore
person other than one accused of having committed offence under Section 3 is not imposed
the burden of proof enjoined by S 24. On person accused of offence under Section 3 however
burden applies, also for attachment and confiscation proceedings. 56
56
Ibid.
 GLOBAL MONEY LAUNDERING RING OF IQBAL MIRCHI 57
A full-blown investigation into suspected terror funding and hawala (illegal money
transaction) operations of the infamous ’D’ company has been launched with the
Enforcement Directorate (ED) bringing under its scanner a Rs. 3,000 crore global money
laundering ring allegedly involving family members and associates of late Iqbal Mirchi—
who was a right-hand man of fugitive Pakistan-based don Dawood Ibrahim. Mirchi, who died
in 2013 in the UK, is suspected to have laundered and moved funds through the hawala route
to purchase a host of properties in at least 10 or more countries with the help of his
associates.
The agency which has registered a case under the Foreign Exchange Management Act
(FEMA) recently to probe the entire range of complex real estate transactions found that at
least four buildings located in Mumbai were sold off by Mirchi’s family in 2010 by creating
“fictitious identities” and front companies in “contravention of RBI guidelines and FEMA
rules.” The agency has also issued notices to Mirchi’s widow, two sons, relatives, lawyers
and business associates in connection with its investigation conducted under the Foreign
Exchange Management Act (Fema). The agency has also contacted the Reserve Bank of India
(RBI) to obtain records on Mirchi and his associates’ business and banking operations in
India. The ED has handed over the investigation of the case to a special investigation team as
it has identified numerous assets used to run the hawala racket.58
57
Iqbal Mohammed Memon vs. State Of Maharashtra (1996 CriLJ 2418); Hajra Iqbal Memon vs. Union of
India (AIR 1999 Delhi 271)
58
Ibid.
RESEARCH ANALYSIS
Money laundering is, thus, a very serious offence and it should not be taken lightly as any
other local crime. This study was supposed to be limited for money laundering in Indian
perspective but could not be done so as it is neither possible nor relevant to discuss the issue
of money laundering without taking its international aspect as every act of money laundering
involves various transactions, national and/or international, with the aim of obscuring the
origin of proceeds of crime.
India has taken up various Anti-Money Laundering measures to curb with this issue but these
measures somewhere or the other have some loopholes or lacunas and thus is not fulfilling
their complete purpose. Some of such problems are pointed out below:
 Growth of Technology: with the advent of technology at such a greater speed it has been
possible for the money launderers to act on obscuring the origin of proceeds of crime by
cyber finance techniques. The enforcement agencies are not able to match up with the
speed of growing technologies.
 Lack of awareness about the problem: the issue of money laundering is growing at a very
high pace. Its unawareness among the common public is an impediment for
implementation of proper anti-money laundering measures. The poor and illiterate
people, instead of going through lengthy paper work transactions in Banks, prefer the
Hawala system where there are fewer complexities and formalities, little or no
documentation, lower rates and they also provide security and anonymity. This is mainly
because such people don’t know the seriousness of this crime and are not aware of its
harmful after effects.
 Non-fulfilment of the purpose of KYC Norms: RBI has issued the policy of KYC norms
with the objective to prevent banks from being used by criminals for money laundering
or terrorist financing activities. However, it does not cease or abstain from the problem
of Hawala transactions as RBI cannot regulate them. Further, such norms are only a
mockery as the implementing agencies are indifferent to it. Also, the increasing
competition in the market is forcing the Banks to lower their guards and thus facilitating
the money launderers to make illicit use of it in furtherance of their crime.
 The widespread act of smuggling: there are a number of black market channels in India
for the purpose of selling goods offering many imported consumers goods such as food
items, electronics etc. which are routinely sold. The black merchants deal in cash
transactions and avoid custom duties thus offering better prices than the regular
merchants. After liberalization of government, though this problem has been lessened but
it has not been done away with completely and still poses a threat to a nation’s economy.
 Lack of comprehensive enforcement agencies: the offence of money laundering is no
more stuck to one area of operation but has expanded its scope include many different
areas of operation. In India, there are separate wings of law enforcement agencies
dealing with money laundering, cyber crimes, terrorist crimes, economic offences etc.
Such agencies lack convergence among themselves. The issue of money laundering, as
we have seen, is a borderless world but these agencies are still stuck with the laws and
procedures of the states.
Combating the offence of money laundering is a dynamic process since the criminals
involved in it are continuously looking for new ways to do it and achieve their illicit motives.
Moreover, since various countries are entering into multiple agreements and conventions in
order to strengthen their measures to combat money laundering, the money launderers are
targeting and exploiting those jurisdictions which are weak and do not have sufficient laws to
deal with such an offence. There is an urgent need for a definite policy of anti-money
laundering. The criminals dealing with these activities do not have any particular pattern i.e.
they have distinct patterns of operation.
India has taken extensive measures in order to curb with the issue of money laundering. It can
rightly be said that the manpower has been tripled as there is Directorate of Enforcement
which leads all the money laundering cases and investigations related to it in the country;
there is also Financial Intelligence Unit which tracks down and analyses the risk of money
laundering through the agencies reporting to it and there is time to time upgradation of the
legislative framework through the proposed changes. However, there is still a further need to
increase the enforcement and take more strict actions against the persons violating them.
Also, the financial institutions are required to implement additional levels of control in areas
such as transaction monitoring, annual review, periodic updation of accounts etc. Moreover,
cost factor also plays a very significant role in having an effective anti-money laundering
regime as high costs and low budget may lead to reduced focus and thus higher risks.
SUGGESTIONS
As it can be seen that money laundering involves activities that are international in nature and
are also at a greater level, therefore, to make a heavy impact it is necessary that all countries
should enact strict and as far as possible same laws so that the money launderers will have no
place to target in order to launder their proceeds of crime by way of weakness of jurisdiction
or the like. Since the States have no obligation in deciding which offences should be
considered as predicate offences to money laundering there is no consensus into the
international harmonizing efforts for anti-money laundering. Thus, there is a need to enlist
common predicate offences to solve the problem internationally particularly keeping in mind
the trans-national character of the offence of money laundering.
Furthermore, the provision of financial confidentiality in other countries is an issue. The
states are unwilling in compromising with this confidentiality. There is a need to draw a line
between such financial confidentiality rules and these financial institutions becoming money
laundering havens.
Apart from that, many a people are of the opinion that money laundering seem to be a
victimless crime. They are unaware of the harmful effects of such a crime. So there is a need
to educate such people and create awareness among them and therefore infuse a sense of
watchfulness towards the instances of money laundering. This would also help in better law
enforcement as it would be subject to public examination.
Moreover, to have effective anti-money laundering measures there need to be a proper
coordination between the Centre and the State. For that the tussle between the two should be
removed. The laws should not only be the responsibility of the Centre but it should be
implemented at the State level also. The more decentralised the law would be the better reach
it will have. Therefore, to have an effective anti-money laundering regime, one has to think
regionally, nationally and globally.
LEVEL II ANALYSIS
SUPREME COURT & HIGH COURTS
The number of cases filed under the Prevention of Money Laundering Act, 2002 from the
year 2008 till 2015 in various High Courts and the Supreme Court are:
Year
2008
2009
2010
2011
2012
2013
2014
2015
No. of Cases filed
2
4
12
22
18
23
18
16
The table can be depicted in terms of percentage in the following chart where the total
number of cases filed during the aforementioned period is 115.
2% 3%
14%
2008
10%
2009
2010
16%
19%
2011
2012
2013
20%
16%
2014
2015
Total no. of cases = 115
The number of cases filed under the Prevention of Money Laundering Act, 2002 in various
High Courts and the Supreme Court individually are:
S. No.
Name of Courts
1
Supreme Court
20
2
Allahabad High Court
3
3
Andhra Pradesh High Court
13
4
Bombay High Court
13
5
Calcutta High Court
3
6
Delhi High Court
16
7
Gujarat High Court
3
8
Himachal Pradesh High Court
2
9
Jharkhand High Court
20
10
Karnataka High Court
2
11
Madras High Court
10
12
Orissa High Court
4
13
Patna High Court
1
14
Punjab & Haryana High Court
1
The table can be depicted in the following chart:
25
20
15
10
5
0
No. of Cases
TRIBUNALS
The number of cases filed in the Appellate Tribunal under the Prevention of Money
Laundering Act, 2002 from the year 2009 till 2014 are:
Year
2009
2010
2011
2012
2013
2014
No. of Cases
8
5
14
3
19
13
The table can be depicted in the following chart where the total number of cases filed during
the aforementioned period is 62.
Total number of cases = 62
20
18
16
14
12
10
8
6
4
2
0
2009
2010
2011
2012
2013
2014
GROUNDS OF FILING CASES
Some of the various grounds under which the cases related to PMLA, 2002 have reached the
Supreme Court, various High Courts and Tribunals are:
S. No.
Grounds
No. of Cases
1
Appeal
16
2
Bail Granted
8
3
Attachment of Property
14
4
Burden of Proof
19
5
Constitutionality of the Act
39
6
Public Interest Litigation (PIL)
20
This table can be depicted in terms of percentage with the help of following chart:
Grounds for filing Cases under PMLA, 2002
Burden of Proof
16%
Attachment
of Property
12%
Constitutionality
34%
Other
51%
Bail Granted
7%
Appeal
14%
PIL
17%